Multi-market unit-commitment and capacity reserve prices in systems with a large share of hydro power: A case study

Whereas spot markets and their related products have been extensively analysed, the amount of literature focusing on the analysis of reserve markets and especially their interaction with other markets is rather scarce. This paper extends prior work on the economic equilibrium of spot and reserve markets with a special focus on markets that are characterised through a large share of hydro power. We theoretically discuss crucial factors determining the unit-commitment decision of generators by explicitly considering the interrelation of their decisions. Taking these effects into account we reflect on the economic equilibrium between spot and reserve markets. To test our hypotheses we developed a linear program with a detailed representation of the secondary control energy market design currently implemented in Germany/Austria. We use this model to derive integrated market outcomes of both, the spot and balancing market. The proposed approach is applied to the Austrian power market; A market which is characterized by a large share of run-of-river generators and pumped hydro storages. The results show that hydro power has a significant influence on the capacity reserve prices.